Saturday, July 02, 2016

What Economists Don’t Know About Physics — and Why It’s Killing Us - by Dave Pruett Former NASA researcher; Emeritus Professor of Mathematics, James Madison University

Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist. — Kenneth Boulding

Spaceship Eart (Credit: NASA)
Our dependence on fossil energy ... has us in a double bind. First, fossil fuels are in finite supply.  If they run out before sufficient low-entropy replacements are found, civilizations will crash due to energy unavailability.  But if we don’t soon quit using them, atmospheric CO2 from burning fossils will crash the ecosphere.  We’re between a rock and a hard place.

The current economic paradigm of perpetual growth greatly exacerbates our dilemma.  Having originated during the age of fossil fuels — when abnormal growth was the rule — classical economics ignores the fundamental role played by entropy in sustainability and suggests that we can simply continue business as usual into the future.  Classical economic theory has thus placed on a trajectory toward catastrophe.

Fortunately, not all economists are blind to physical laws.  As early as 1857, John Stuart Mill developed a non-growth “stationary-state” economic model.  More recently, the Quaker economist Kenneth Boulding (1910-1993) proposed a theory of “evolutionary economics,” which considers human economy as a subsystem of evolutionary biology.  And in 1977, Herman Daly sounded the clarion call for “ecological economics” with the publication of Steady-State Economics.  Daly, a 2014 recipient of the Blue Planet Prize, is currently on staff at the Center for the Advancement of the Steady-State Economy (CASSE).

Economics for a Full World — Daly’s 2014 address in Tokyo — is lucid and accessible.  It deserves to be read in entirety for multiple reasons, not the least of which is that he offers concrete and reasonable solutions for both our economic and ecological woes.  Here are a few gems from Daly:
  • Because of exponential growth since World War II, we now live in a full world, but we still behave as if it were empty.
  • That richer (more net wealth) is better than poorer is a truism.  The relevant question, though, is, does growth still make us richer, or has it begun to make us poorer by increasing “illth” faster than wealth
  • Examples of “illth” are everywhere, even if they are still unmeasured in national accounts.  They include things like nuclear wastes, climate change from excess carbon in the atmosphere, biodiversity loss, depleted mines, deforestation, eroded topsoil, dry wells and rivers, sea level rise, the dead zone in the Gulf of Mexico, gyres of plastic trash in the oceans, and the ozone hole.
  • Their refusal to acknowledge [ecological limits] is why many economists cannot conceive of the possibility that growth in GDP could ever be uneconomic.
  • The economy should not be used as an idiot machine dedicated to maximizing waste.
  • Our vision and policies should be based on the integrated view of the economy as a subsystem of the finite and non-growing ecosphere.
  • And, quoting John Ruskin, “There is no wealth but life.”
Hope remains, but only if humans transition quickly from an unsustainable economic paradigm to one in which “humans and markets are not exempt from the laws of nature.”

Read more at What Economists Don’t Know About Physics — and Why It’s Killing Us

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